Canadian Imperial Bank of Commerce at RBC Capital Markets Financial Institutions Conference (Virtual) Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Darko Mihelic - RBC Capital Markets - Analyst : And I thought today we can maybe just kick off the session to sort of discuss, in lieu of the environment that we are in with Russia's invasion of Ukraine, if you can maybe just speak generally to what it is that -- given that you are a specific group head, what is it that you are trying to accomplish at CIBC this year? And has any of that perhaps changed in lieu of the significant geopolitical tensions and some of the market volatility that we are experiencing today? Laura Dottori-Attanasio - Canadian Imperial Bank of Commerce - Senior EVP & Group Head, Personal & Business Banking, Canada Well, thanks, Darko. I guess I'd say, while we are in uncertain times, I think it's important for all of us that we have to be vigilant and we have to be ready for things that might happen that are unexpected. So, very important. But at the same time, that doesn't make us deviate, if you will, from our strategic priorities that we gave ourselves over the long-term. So, there's not losing sight of where we are headed in the long term, but of course we have to allow for the realities of what are happening today. So, our strategic focus hasn't changed. Very similar in the retail bank as it is for the overall bank that Victor would have shared. I think it was in the fourth quarter where we talked about three strategic priorities. One was wanting to ensure we could continue to invest in future differentiators when we look at where there might be high-growth sort of more fintech type opportunities. We talked about focusing on the high-growth, high-tech client initiatives. And then the other was really on client experience in the digital world. So, all about how do we get much better client experience, more seamless experience and allowing for a lot more digital opportunities. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 09, 2022 / 3:40PM, CM.TO - Canadian Imperial Bank of Commerce at RBC Capital Markets Financial Institutions Conference (Virtual) And so, very similar what we're doing in the retail bank. We continue to work on how we do better from a client experience perspective. We talk a lot about wanting to deliver consistent and sustainable long-term performance, so a lot of what we're doing today and continue to do is make the right investments to allow for us to be stronger on a go-forward basis. I like to think we're seeing that with some of our performance. We seem to have some good momentum in the business where we're starting to see market share gains across our businesses. And so, we are going to continue to focus on client experience on our higher growth segments and how we can differentiate ourselves through things like more personalization, etc. So, all that to say strategic vision remains the same. That doesn't change. We continue to work towards it, but when we think about what's happening in today's world, it's more about we look at might our revenues be impacted. For the time being we haven't changed our targets in terms of what we expect to deliver for 2022. But we are thinking and we need to ensure we have agility when it comes to our spend. And so, that we do have, I would say, the levers that are required if we feel we need to pull back on some of our spend or investment, dependent upon how things play out in the market.

Question: Darko Mihelic - RBC Capital Markets - Analyst : And maybe just for context, I mean, so 48% loan-to-value on the uninsured part of the book. Do you see yourself as being significantly different from peers in any respect with respect to mortgages and/or risk posture within Canada? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 09, 2022 / 3:40PM, CM.TO - Canadian Imperial Bank of Commerce at RBC Capital Markets Financial Institutions Conference (Virtual) Laura Dottori-Attanasio - Canadian Imperial Bank of Commerce - Senior EVP & Group Head, Personal & Business Banking, Canada Well, I think the whole industry that plays in the industry market for I'm going to say the prime borrower has more or less similar book quality. So, I'm very happy with the quality of the book that we have when we look at the performance we've had. What we are -- what we do have, and all of us are a little bit different, we have a proprietary sales force. And so, we have mortgage advisors or our banking centers or contact centers that are doing mortgage sales. So, we think that's a differentiator and a positive one in that it should allow us to do better from an anchoring or franchising perspective given it is all CIBC team members that are out. We have a strong focus on quality. And by quality, not just quality of the borrower, but we are putting a lot of emphasis on can we anchor or franchise these clients. So, we are not just growing for growth's sake, we are growing because we want to be able to deepen the relationships we have with the clients that we onboard. And so, we are really ensuring we have, I'm going to say, balanced growth across the portfolio. I don't know if that helps with the question.

Question: Darko Mihelic - RBC Capital Markets - Analyst : And so then lastly, I guess to wrap up the discussion on mortgages, because we've seen CIBC go through a period of high-growth, low growth and now back to high-growth, how do we prevent that kind of cyclical thing from happening again? How do we -- how does -- what is CIBC doing to sort of maintain a much more level maybe industry like or better than industry sort of growth level that's a little more, I don't know, less cyclical or less up-and-down going forward? How do you sort of maintain a much more level growth picture in the mortgage book -- in the mortgage business? Laura Dottori-Attanasio - Canadian Imperial Bank of Commerce - Senior EVP & Group Head, Personal & Business Banking, Canada I think just back to, again, our distribution model, ensuring that we have stability in our sales force in terms of getting -- if you will, getting the numbers right in terms of amount of people we need to have that are out trying to do mortgage business. That's very important. I think we've got that one done. And then as I talked about quality of the borrower, looking for those borrowers that we feel we have a better opportunity to franchise. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 09, 2022 / 3:40PM, CM.TO - Canadian Imperial Bank of Commerce at RBC Capital Markets Financial Institutions Conference (Virtual) And so, that also becomes important in terms of ensuring you have a better quality of book, that you can retain your clients, and so that should allow for more stability of performance as well. And then a lot of what we are doing are just trying to increase our client experience, if you will, trying to get that end-to-end journey right where we take out pain points for our clients so that they have more of a desire, if you will, to stay with us. And as we do that and we do better, we would expect that we will see -- I'm going to say more consistent and sustainable performance as we go. So, it's just all of those different changes in how we go about doing the business. And so, that should allow us to be a lot more consistent, if you will, in terms of delivery. We still have a lot of work to do though. We have great momentum in the business but, again, still have a lot of opportunity ahead to do even better.

Question: Darko Mihelic - RBC Capital Markets - Analyst : And I realize commercial -- commercial loans is sort of Jon's business, I suppose. But I'm just wondering -- and we've heard from some banks that they are really connecting commercial and wealth and even connecting to the retail side of the business. Can you maybe give us an idea of how CIBC approaches this opportunity and is it significant for you? Laura Dottori-Attanasio - Canadian Imperial Bank of Commerce - Senior EVP & Group Head, Personal & Business Banking, Canada Yes, absolutely, and I guess I'd start with not Jon's business, it's all of our business. We're all in this together and so we spend a lot of time together and we're all doing it together, offering each other advice and things to do and effectively challenging one another. But we work very well together. Jon and I actually joined the bank around the same time, about 12 years ago. And we're desk mates now when we do go into work, so we see a lot of each other and we do work closely together. There is a lot of interplay between the two in that on the wealth side our product creation happens on the wealth side of the business. The platforms are there and we sell product in the retail distribution arm and we use the platforms that sit there. So, we work very closely together to ensure that our voices are heard, if you will, in terms of platform configuration, what works best for the client base. So, very close on the wealth side. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 09, 2022 / 3:40PM, CM.TO - Canadian Imperial Bank of Commerce at RBC Capital Markets Financial Institutions Conference (Virtual) And we also have referral programs in place to incentivize our team members to ensure we get our clients in the right offer. And by that I mean if we have a client in retail and they look like they'd be better served either by private banking or in wealth, we have all the programs in place to ensure that people are incentivized to get our clients into the right offer. So, a lot of conversations happen amongst our team members on an ongoing basis. And then at the commercial side, we do share, again, a lot of the same platforms. And so, you will see for some of the investments that Victor talked about I think just in the last quarterly earnings call, whether that was our investment in the nCino platform that will help on the digitization front for commercial or small business lending, or our investment in Pollinate that will help on the merchant servicing side, we use a lot of similar infrastructure. And so, how we do things, if I think of nCino, we work together, retail and commercial are at the table together where we made the decision to invest. And we start in the small business side which sits in retail. And as we test and learn and, if that looks good, we will look to roll it out so we can try to I'd say simplify how we do business, minimize the amount of platform complexity that we have so we can just deliver more efficiency to our shareholders. So, we work very -- all that to say we work very closely together.

Question: Darko Mihelic - RBC Capital Markets - Analyst : Okay, interesting. So, maybe just switching gears a little bit, talking about credit cards, because credit cards is fairly important. I know you recently closed on the Costco acquisition. And maybe you can just talk a little bit about what you are seeing in credit cards and some early views on even Costco if you could, please. Laura Dottori-Attanasio - Canadian Imperial Bank of Commerce - Senior EVP & Group Head, Personal & Business Banking, Canada Yes, absolutely. So really happy with what we are seeing in credit cards. Well, first I'll start with maybe the areas that you don't see when you're looking at our numbers, but all goes well should show in the numbers at some point. We are doing really well on the acquisition side on cards and in fact the information we have we are doing better than our peers in terms of client acquisition. Now of course what matters that's great, but then you have to get the engagement piece in order for it to really reflect in your numbers over time. When we look at purchase volumes they are up they are up over pre-pandemic levels, which is great, and that's in all categories except of course REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 09, 2022 / 3:40PM, CM.TO - Canadian Imperial Bank of Commerce at RBC Capital Markets Financial Institutions Conference (Virtual) for transportation just given what we've been living through. And so, purchase volumes are looking very good and promising. And that's the leading indicator normally to outstanding or revolving balances. And that's an area that we haven't really seen come back yet. Clients continue to be prudent. We have clients that have been very careful paying down debt, holding onto increased deposits. And so, I do think that piece will take more time before we see that -- an increase in our numbers, more of I'm going to say a return to normal. So, that piece will take a bit more time. But all signs indicate to I'm going to say promising performance on the growth side. Costco, really happy with that. As you know, that brings us a couple of million of new clients to CIBC that are affluent, that don't currently deal with CIBC. So, we have a lot of opportunity if we can franchise these clients successfully. Right now first focus was the acquisition we made of the portfolio. Just happened this weekend where we did conversion and so happy to report our conversion was very successful. And so, for us conversion is when we buy the portfolio and we take on the balance it's important that everyone's credit card works when they go and buy. That went off without a hitch. Everything is perfect in that regard. And now of course we've got so much excitement with the card, we're being inundated in our call centers where people want to learn more, which is actually very promising. However, we are seeing wait times go up quite a bit in our call centers, so we have to get through that piece of it. And then once we are there we are going to start talking about what can we -- well, we already have plans, but how we go about the franchising so that we can deliver, A, more to these clients because we think we have really good offerings across the bank to offer. And then obviously do more on the revenue growth for the bank.

Question: Darko Mihelic - RBC Capital Markets - Analyst : Do you have any targets on the Costco customers and how many you want to sort of turn into CIBC customers? Have you shared those? Are you willing to share those? Laura Dottori-Attanasio - Canadian Imperial Bank of Commerce - Senior EVP & Group Head, Personal & Business Banking, Canada We have many targets and, I don't know, at some point I think we have an Investor Day coming up and so we are going to share some of our targets. So, I will leave the unveiling for Investor Day. So, you can see there and say if you think they are good or not. But -- so, we will have realistic targets, but I'd like to tell you that for every single Costco member would love to have as a CIBC client and we are going to try to do that. But we do have perhaps more realistic targets that we are working with and that we will be measuring as we go. And that we are going to be prepared to share so that you can see how well we are doing or not. And we can talk about where we are succeeding or where we need to lean in a little more as we go.

Question: Darko Mihelic - RBC Capital Markets - Analyst : Yes, we just always worry that the inflationary environment takes away some of the positive operating leverage later on in the year that we are hoping for. So, it doesn't sound like (multiple speakers). Laura Dottori-Attanasio - Canadian Imperial Bank of Commerce - Senior EVP & Group Head, Personal & Business Banking, Canada We always focus to deliver positive operating leverage like that. And we always say over the long term that's exactly where we want to be. But again, we do have some cost pressures coming our way and, rest assured, we are going to be incredibly thoughtful I would say and prudent about how we approach that. You'll be happy to know -- I was going to say you'll be happy to know, just to your prior question with Jon, we do sit down on a regular basis as an executive committee and effectively challenge one another on all of those things so that we're all aligned in terms of, okay, what do we think needs to happen next and whatnot. So, I think we'll be good.